We've had a number of US-based law enforcement bodies over
the year try to get hold of our data without going via the
appropriate Australian bodies, and it doesn't work out for
them. In the end, they have always ended up submitting a
request for cooperation via the Australian Federal Police,
as they are required to do, and we respond to that request
in line with Australian law.
Even so, as an Australian I decided to use a hosting company whose servers are physically hosted in Australia.
Fair enough. Hosting in Australia is something we consider occasionally, but the bandwidth pricing is just so much higher. It's always worth looking at demand of course - are there enough people who would be willing to pay a premium to have their email in Australia to justify running up a full instance here.